How to Close Out a Client Matter: A Bookkeeping and Trust Accounting Checklist

When a case or legal matter ends, attorneys naturally move on to the next client. But the financial side of the matter is not finished until the final bill is sent, the trust balance is resolved, and the records are complete.

Matters that are closed without a financial wrap-up are a common source of problems later: small leftover trust balances, unbilled time, unrecovered costs, and missing documentation. This checklist helps small law firms close out each matter cleanly.

1. Enter All Remaining Time and Expenses

Before sending a final invoice, make sure every attorney and staff member has entered their time on the matter. Check for any costs that have been incurred but not yet recorded, such as:

• Court and filing fees
• Deposition and court reporter charges
• Expert witness fees
• Copying, postage, and courier costs
• Travel expenses

Vendor bills often arrive weeks after a matter ends, so it can help to wait a short period or confirm with vendors before finalizing.

2. Send the Final Invoice

The final invoice should clearly show all fees, costs, payments received, and any amounts applied from trust. A clear final statement reduces client questions and disputes.

If the client has an outstanding balance, follow the firm’s normal collection process. If the client has paid in full, the matter’s accounts receivable balance should be zero.

3. Reconcile the Client’s Trust Ledger

Review the client’s individual trust ledger before the matter is closed. Confirm that:

• Every deposit and disbursement is recorded
• All checks written from trust have cleared
• The ledger does not show a negative balance
• The ledger balance agrees with the firm’s most recent three-way reconciliation

If you need a refresher, see our article on three-way reconciliation for an IOLTA account.

4. Transfer Earned Fees to Operating

Any fees that have been earned and billed and are being paid from trust should be transferred to the operating account promptly, with documentation tying the transfer to the invoice. Earned fees should not be left sitting in trust, because that can create commingling concerns.

5. Refund Any Remaining Client Funds

If money remains in trust after fees and costs are paid, it generally belongs to the client and should be refunded promptly. Send the refund with a final accounting showing how the client’s funds were used.

If a client cannot be located or a refund check is never cashed, the funds cannot simply be moved to operating. Our article on unclaimed or unidentified funds in a trust account explains the options.

6. Resolve Advanced Costs

Review any client costs the firm advanced during the matter. Confirm whether they were billed, recovered from a settlement, reimbursed by the client, or will be written off. Unrecovered costs should be handled consistently and discussed with the firm’s CPA, since their tax treatment can vary.

For contingency-fee matters, the settlement statement should show how costs were reimbursed. See bookkeeping for personal injury and contingency-fee law firms for more detail.

7. Confirm a Zero Balance

At closing, a matter should ideally show:

• A zero trust balance
• A zero accounts receivable balance, or a documented collection plan
• No unbilled time or unrecovered costs

If any balance remains, note the reason in the file so the next person who reviews it understands what happened.

8. Close the Matter in Your Software

Mark the matter as closed in your practice management and billing software, such as Clio or MyCase. This keeps closed matters out of active reports and helps prevent new time or charges from being recorded to the wrong file.

9. Keep Complete Financial Records

Retain the matter’s financial records, including invoices, trust ledger history, disbursement records, and closing statements. The Rules Regulating The Florida Bar require attorneys to keep trust accounting records for at least six years after the events they record. These records are essential if a client questions a bill or the firm’s trust account is reviewed. See our guide on preparing for a Florida Bar trust account audit.

Build Matter Closing Into Your Routine

The easiest way to keep trust accounts clean is to make financial closing a standard step every time a matter ends, rather than something that happens during year-end cleanup. A short monthly review of recently closed matters can catch anything that was missed.

Let Us Handle the Details

A&W Associates provides law firm bookkeeping, trust accounting, and payroll services for attorneys in Wesley Chapel, Tampa, and throughout the Tampa Bay area. We help firms keep client ledgers accurate, close matters cleanly, and stay ready for a trust account review.

Contact A&W Associates to learn how we can support your firm.

This article is provided for general informational purposes and does not constitute legal advice. Attorneys should consult the Rules Regulating The Florida Bar and their own advisors regarding their specific trust accounting obligations.